Lonmin beats forecasts but warns on 2012

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LONMIN beat expectations with a 59 per cent jump in full-year earnings, even though a strike at its Karee operations drove up unit costs and forced the miner to cut its output target.

The world’s third biggest platinum producer said demand next year would be softer than had been forecast, prompting it to change previous forecasts of a supply deficit for 2012 to a “balanced or moderately oversupplied” platinum market.

It also said it expected volatility in precious metals markets in the short term.

Platinum is one of the commodities most geared to the Eurozone, with Europe consuming roughly a quarter of the metal for catalysts for vehicles, used to cut pollution from car exhausts.

But chief executive Ian Farmer said that China was taking up much of the slack from a weaker Europe: “Jewellery is price sensitive, so as price comes down or the price relative to gold looks more attractive, we see volumes pick up.”

Farmer said he expected prices to recover “towards the end of 2012, 2013”. Platinum prices have dipped in the 2011 calendar year, with spot prices down around six per cent since January.